Thursday, September 23, 2010

GUILTY, GUILTY, GUILTY!

I'm sure that if you're a lefty, you've demanded that the rich pay higher taxes than the middle class. If you've tried to get that past a libertarian, they probably have countered with arguments about equality and fairness that mask the true issue (they want to be as rich as possible, even if only vicariously through their heroes). Somehow, you knew there was an argument against that. You knew you had the moral upper ground, but perhaps were stymied by the arguments about generating jobs, keeping what they rightfully earn, and such. Perhaps you found yourself caught between wanting to be a good lefty and trying to be understanding of the capitalist ideal, and you couldn't find your argument. Here it is.

There are no figures or citations in this because, if challenged, I can find them; and chances are, the righties would pull out some industry-funded astroturfed study from a no-name university that supports everything they say. So let's just stick with the plain, moral facts: American-style capitalism is in the process of destroying this country, and it is morally right for us to expect them to pay the tab for their decades of misdeeds.

Look. Things were bad in the 70s, and we were losing out to overseas cars, overseas steel, and other products. The Japanese were undercutting us. Our companies here had never had to worry about efficiency before, and it was a concept that rocked them to their core. While paying lip service to the idea of adopting Japanese ideas and efficiency to make our home-grown companies competitive, they attacked employees. They slashed benefits, slashed wages, slashed employees, and finally, when American workers refused to work for less money than it takes to live on in America, the manufacturers up and left. Little by little, at first, they picked up their companies and moved to places like Mexico. Then they discovered just how profitable it was to manufacture in the Third World, so they started building plants in China, Malaysia, Indonesia, Burma, and American Saipan, among others. They paid wages that wouldn't buy you a hamburger in this country, then charged Americans higher prices for the privilege.

So far, you're agreeing that happened, but you're wondering why this is a moral, and not a business, issue. Here's the deal. Those companies had social contracts. What? I hear you cry. A social contract isn't legally binding! Well, yes it is. As many a tort has shown us, a non-verbal contract can be just as binding as a signed contract. And here's the contract: the companies agreed, when they built their plants, that they would support entire communities, and the communities, in turn, agreed to provide all the necessities that made a company viable in America. The community agreed to provide a workforce that was able, willing, and ready to work; they would provide safe neighborhoods for the company to operate in; they would provide streets, lighting, sanitation, police, firehouses, and cleanliness. The community would also provide all the local ancillary needs a company might have that you'd never think of, like pharmacies, groceries, doctors, dentists, lawyers, banks. Now here's the kicker: we kept our part of the bargain. We invited businesses in to our community because they promised us livelihoods in exchange for their presence. It was a symbiotic relationship, and it worked.

Then they were suddenly lost. They couldn't cope with modernization (at first) or efficiency. They were losing money on outdated, rusty supply and delivery systems that had never been challenged because there was no need. America was its own ecosystem. Then those companies abandoned America for profits. For those of you who might argue that a business has no responsibility other than to its shareholders or owners, you are wrong. When a business establishes itself in a community, indeed is the primary support for a community, you've accepted responsibility for that community. And they abdicated it. Left it, abandoned it, threw it down the well. Companies discovered that, overseas, desperately poor people were willing to work for pennies (or sometimes nothing, in the case of Chinese slave labor), and with dollar signs in their eyes, they breached their social contract.

Now look at what we have. The disparity between rich and poor has increased dramatically since 1980. Entire neighborhoods and towns, almost entire states, have fallen into decay, poverty, crime, and violence. Little businesses that those companies supported died. The taxes those companies would have paid to maintain the streets, lights, police, and so on, were gone. The companies asked communities to build them an infrastructure, and the communities gladly responded. Then the companies up and left, so suddenly that many communities had no chance to recover. They offered little to no assistance for the now-unemployed, and they didn't even clean up their own toxic messes when they left, leaving yet more liabilities that they expected others to clean up. They promised capitalism, but capitalism involves reinvestment of the profits (the capital) into the company and its community.

They broke the contract, and argued that it was the American Way. They abandoned capitalism for sheer greed, but asked the government to protect their profits. The madness of the Reagan and Bush and Bush II years (and, yes, the Clinton years) somehow bought into this supply-side malarkey. They even abandoned the supposed ideals of supply-side (trickle-down) economics, in which a company makes more revenue by not being taxed heavily and reinvests that into their companies, their workers, their communities. Instead, they kicked capitalism to the curb for good old feudalism. We paid the price.

So screw them. We are now on the verge of seeing the country crumble. Hundreds of billions of dollars will have to be spent to get this country back to the state it was in, and I don't think that's going to happen unless these companies—which are still in America—are compelled to clean up their vast ruin via taxes and other assessments. They abandoned loyal workers who gave their entire lives, they bankrupted pensions, and they never looked back. They broke the promise they made, and that broken promise has cost America countless lives, a healthy and prosperous future, safe neighborhoods, broken families, and a chance at better lives. They broke a contract, and the consequences run in the trillions of dollars. We have every right, nay, a moral imperative, to make them pay for the damage they've done. In a court of law, my feeling is they'd be put into receiverships. Instead, we give them tax breaks.

I'm trying to remember if I've ever defended a company's right to keep all its profits. I might've, in an insane time in an economics class. If I did, you'll never hear it from me again. All those companies, the appliance makers and car makers and TV makers who kept their business operations here but moved their manufacturing operations to desperate countries willing to work in fiefdom-like conditions, all of them, they owe us. They sustained this country and turned their backs on us when it we needed them most. And now they argue they deserve even bigger tax cuts for the wealthy.

I certainly agree with some of this, but I'm not sure that raising taxes on companies makes a lot of sense. After all, how will the companies pay those taxes? The only place to get the money is from the products they sell, and that means the consumers of their products will pay it, not them. Taxes on business is nothing more than a sales tax, it seems to me, and sales taxes are regressive, not progressive. If you want to raise taxes, do what Obama wants, which is to raise taxes on those making over a certain amount, i.e. increase the rates progressively.

Oh yes, and while we are at it, why don't we eliminate the tax breaks we give corporations who move to other countries. That has never made sense to me from a liberal or a conservative perspective, nor have I ever heard anyone argue for it, and yet it seems we never get up the gumption to eliminate those tax breaks. Maybe there is something i don't understand about this, but then why won't someone explain it to us? What we should be doing is giving whatever tax breaks we can afford and find prudent to those companies who stay here, not those who leave.

I find outsourcing to be morally questionable too, but there is such a thing as workers whose salaries make them non-competitive, and I'm not sure what the answer is to that.

What you haven't touched on is the dysfunctional way the stock market has affected business. The fact is, many layoffs are bad for the long term interests of the company, and yet the stock market has pushed companies into layoffs for short term benefits, because investors are interested in their own profits, not the health of the company. Someone ought to figure out a way to overcome this dynamic, but no one ever does.

Stuff I think is worthwhile

This DeppityBob character...

DeppityBob, aka Dep, is a middle-aged Hoosier of some odd experiences and a few roads. Every long-term writing project he (I) start/s seems to stall, but blogging seems to be the one thing I (he) am/is able to accomplish. It's like screaming "I'M IMPORTANT!" in a sea of ADD people yelling the same thing.
By the way...Scotsylvania isn't a state of mind. It's just pretty much my house and yard.